• It’s Time for Congress to Protect Robert Mueller

    A few days ago I praised Sen. Jeff Flake for publicly slamming President Trump, and then suggested that there was little more that conservative politicians could do. There’s no reason to expect conservatives to vote against conservative bills just because Trump happens to like them, after all.

    But now along comes this:

    Three conservative House Republicans are expected to file a resolution Friday calling on special counsel Robert S. Mueller III to recuse himself from his probe of Russian meddling in the 2016 U.S. presidential election, accusing him of conflicts of interest. Rep. Matt Gaetz (R-Fla.), who wrote the resolution, accuses Mueller of having a conflict of interest because he was serving as FBI chief when the Obama administration approved a deal allowing a Russian company to purchase a Canada-based mining group with uranium operations in the United States, according to a draft obtained by The Washington Post.

    This is about what we’ve come to expect from the ultras in the House, but it’s not going to stop with them. Fox News will jump on board; the Wall Street Journal editorial page will nod wisely; Trump will toss out a barrage of tweets; and momentum will build. So here’s something the Flakes and Corkers of the world can do: introduce legislation making it clear that Trump better not interfere with Mueller—and writing language that will make it impossible for him to do so. Even if Trump vetoes it, it sends a strong message that the rule of law matters more than Donald Trump’s address.

  • Chart of the Day: Net New Jobs in October

    The American economy gained 261,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at 171,000 jobs. That’s not bad. The unemployment rate ticked down to 4.1 percent—also not bad except that it was for the wrong reason: there are half a million fewer people employed this month compared to September, but nearly a million people dropped out of the labor force. The labor participation rate decreased substantially to 62.7 percent.

    Because of the recent hurricanes, our best bet is probably to average the (revised) September and October figures. If you do that, we’ve added an average of 140,000 jobs per month over the past two months, barely enough to keep up with population growth. The labor force participation rate has declined 0.1 percent per month and about 300,000 people dropped out of the labor force each month. This is weak but not disastrous performance.

    On the earnings front, hourly earnings of production and nonsupervisory employees declined at an annual rate of 0.5 percent. Over the past two months, then, hourly earning have risen at an average rate of about 2.2 percent, which is just a little above inflation. Again, this is weak but not disastrous.

    Overall, the past two months haven’t been great. We’ll see how things go over the holiday season.

  • A Little Bit of Pushback on the Jeff Sessions Story

    Cheriss May/NurPhoto via ZUMA

    Donald Trump and Attorney General Jeff Sessions have both said they were unaware of any connections between the Trump campaign and Russian officials. However, the New York Times is running with a story today saying that recently unsealed court documents “cast doubt” on this. They’re talking about the charging document against George Papadopoulos, and this is the relevant paragraph:

    I considered writing about this yesterday, but backed off. Both Trump and Sessions were at this “national security meeting,” but all this document says is that Papadopoulos claimed he had contacts in Russia and could set up a meeting. Other sources say that Trump asked a few questions and Sessions urgently advised against any talks with Russians. Given this, I figured that both men could truthfully say they were unaware of any contacts. They were aware that a staffer said he knew people and could set something up, but he was shut down and nothing ever happened.

    At least, that’s all we know based on this document—though it’s certainly possible that something more happened later on. This is obviously something that’s worth following up, but for now it should be treated with a bit of caution.

  • More Charts: The Child Tax Credit and the End of the Medical Expenses Deduction

    The Republican tax bill eliminates deductions for a bunch of odd things: tuition debt, mortgage interest, alimony, medical expenses, state and local taxes, gambling losses, tax prep expenses, moving expenses, and a few others. Several of these are obviously designed to punish blue states especially hard. I suppose the gambling thing is a sop to evangelicals. Alimony is…hard to figure out. Ditto for moving expenses and tax prep. None of these are going to raise much money, so I’m not sure what the point is.

    But there are two sizeable ones worth looking at. The first one is the bill’s expansion of the child tax credit. Netted together with other changes, this benefits families with lots of children. Here’s where those families live:

    No surprise: red states tend to have a higher percentage of children who will qualify for the tax credit. Once again, the tax bill is biased in favor of red states.

    But then there’s medical expenses. This is a little tricky to figure out, but I wanted to test my intuition that this actually hurts red states more than blue states. The deduction for medical expenses helps families with big out-of-pocket costs as a percentage of their income, so I used Urban Institute data on average spending among those with the highest medical expenses. Note that “top 10%” refers to those with the highest medical expenses, not to well-off people in general:

    This time it’s red states that suffer the most. This makes sense, since red states have higher levels of uninsured residents and, often, higher medical costs thanks to less competition in rural areas.

    So why is this deduction being killed off? It seems like it came out of nowhere, and it’s not as if the tea party has been outraged by it or anything. One possibility is that a deeper dive would show that it’s mostly poor people in each state who have big medical expenses, and who cares about the poor? Another possibility is that this is some kind of subtle attack on Obamacare that I can’t quite get my hands around. Or maybe I’m not using the right data to really see what’s going on here. It’s mysterious.

  • Charts of the Day: How Republicans Are Using the Tax Code to Screw Democratic Voters

    The Republican tax plan caps the mortgage interest deduction at $500,000. The Washington Post today has a lovely chart showing which states this hits most heavily:

    Blue states are footing nearly the entire bill for this. But maybe it’s just a coincidence. I decided to try my hand at a couple of more charts. Here’s the state and local tax deduction:

    Blue states again! Go figure. The GOP plan also ends the deduction for student loan interest. I don’t happen to have data for that by state, but I do have the percentage of each state’s population with a bachelor’s degree. That’s probably a decent proxy:

    Blue states are the big losers again. Needless to say, this is a double whammy since students themselves are heavy Democratic voters. I’m afraid to look at the distribution of deductions for adoptions and medical expenses, which have also been axed in the Republican plan.

    Has there ever been a tax proposal in recent history so obviously aimed at punishing voters of a particular political party? I sure don’t remember one.

    NOTE: All of these charts use percentages, not raw numbers. Blue states aren’t getting screwed just because they’re bigger. They’re getting screwed because they have bigger shares of expensive housing, high wages, and educated residents.

  • Lunchtime Photo

    Marian has curated today’s lunchtime photo. This is Moll’s Gap, a beautiful valley smack in the middle of southern County Kerry. The top photo shows the gap in daylight. The bottom photo, taken from a different spot, shows the gap at dusk with storm clouds gathering. The purple coloring is authentic, not the result of me playing around in Photoshop. I am mystified about where it comes from.

  • President Trump Suddenly Loves the Civilian Justice System

    I know I shouldn’t bother with this, but—oh hell, I’m just a weak man. Here is our president today:

    Yesterday Trump said we needed much quicker and much stronger justice, and that’s why he thought the civilian justice system was such a joke. Today, suddenly the civilian justice system is “statistically” faster than military justice and is fully able to hand down the death penalty. In fact, the civilian system is probably better because…New York. Or something.

    I can’t keep up.

  • Scott Pruitt Is Making the EPA Safe for Fossil Fuels Again

    Tom Fox/TNS via ZUMA

    This is yesterday’s news, but I never got around to highlighting it. However, it’s worth noting, if only for the historical record:

    Effective immediately, scientists who receive EPA funding cannot serve on the agency’s three major advisory groups…. “We want to ensure that there’s integrity in the process and that the scientists that are advising us are doing so without any type of appearance of conflict of interest,” EPA head Scott Pruitt said at a press conference announcing the directive.

    The effect of this order is pretty obvious. Scientists who receive EPA funding are mostly academics who study climate change, dangerous chemicals, endangered species, and so forth. Get rid of those folks, and you can stock up the advisory groups with scientists hired by corporations, homebuilders, and coal companies. As near as I can tell, there’s barely even a pretense that there’s any other reason. Just a bit of obvious blather about conflicts of interest, along with some dog whistles to evangelicals.¹ And with that, the deed is done.

    Those of us of a certain age have grim memories of James Watt, Reagan’s first secretary of the Interior. Scott Pruitt appears to be his identical twin separated at birth. Watt was eventually forced to resign, but not because he wanted to blanket every acre of wilderness with coal mines and oil drilling. It was because he told a racist joke. Unfortunately, Pruitt probably learned from that and will limit his actions to making America safe for fossil fuels.

    ¹In this case, it wasn’t really a dog whistle. Pruitt just straight up quoted from the Book of Joshua for no real reason. But in case you don’t know, the key word to watch for is “stewardship.” It sounds benign, but among evangelicals it’s the go-to word that describes the Lord’s plan: namely that he provided us lots of coal and oil and timber, and by God we should use it.

  • Republicans Double Down on Screwing Blue States in Tax Bill

    The Republican tax plan is out!

    The plan establishes three tax brackets, 12, 25 and 35 percent, and also keeps a top rate of 39.6 percent for the highest-earners, collapsing the total number of brackets from seven.

    So…that’s four brackets? No, no: it’s three brackets plus a special top rate. In other words, four brackets? No, you don’t get it! Liberals never get it! What’s wrong with you?

    Fine, let’s move on:

    After much nail-biting debate, the House will not make any changes to the pretax treatment of 401(k) plans. “Americans will be able to continuing making both traditional, pretax contributions and ‘Roth’ contributions in the way that works best for them,” the talking points say.

    But there’s also this:

    One of the biggest flash points will be proposed changes to the popular mortgage interest deduction. Under the Republican plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000.

    Fascinating. The House boffins apparently decided that retirement plans were more untouchable than the mortgage interest deduction. The most likely reason is that capping mortgage interest is, like state and local taxes, something that will mostly affect folks in blue urban areas. In Los Angeles, $500,000 for a house is right smack in middle-class territory. Lots of Angelenos will be affected by this. But in Memphis or Indianapolis? Only someone pretty well off buys a house that expensive. There’s also this:

    Republicans used at least a few budgetary maneuvers to squeeze the plan inside its constraints. For instance, different inflation measures limit some costs….The proposal repeals an itemized deduction for medical expenses, a crucial provision to households with extraordinary health-care costs. It also repeals the tax credit for adoption and the deduction for student-loan interest.

    They’re screwing students? That’s some serious hardball. And repealing the medical deduction is very odd. I can’t quite figure out why they decided to target this. Is it some back door way of damaging Obamacare?

    The rest of the plan appears to be pretty much as predicted. The estate tax is eliminated after six years and Republicans have doubled down on their plan to screw residents of blue states, but otherwise it’s mostly what we expected. On the corporate side, the basic rate goes down to 20 percent; the pass-through rate goes down to 25 percent; and capital costs can be expensed immediately instead of depreciated.

    However, despite what the Washington Post reported last night, the bill doesn’t appear to expire after eight years. They’re shooting for a permanent change.

  • WaPo: Republican Tax Plan Will Be Temporary

    Like the leaves of autumn, the Republican tax bill will be a glorious but fleeting sight. Corporations are advised to enjoy it while they can.Yin Bogu/Xinhua via ZUMA

    This is going to be a helluva tax bill that Republicans plan to unveil on Thursday. In addition to the motley collection of spit and duct tape already holding it together, House leaders have tossed in yet another last-minute switcheroo:

    In a late switch, they now say the initial version of their bill will not contain one of President Trump’s major promises. House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said Wednesday that the bill he will introduce would not permanently lower the corporate tax rate to 20 percent. Instead, the cut would be temporary, and that reduction would expire in around eight years, according to a person briefed on the planning who wasn’t authorized to disclose details.

    ….“It’s going to take several steps through the process to achieve” permanence on the corporate rate, Brady said, citing what he termed “those awfully funny” Senate rules.

    Even Republicans used to agree that a temporary corporate tax cut would be all but useless, but I suppose that goes out the window now. The entire noise machine will be dedicated to the proposition that a temporary cut will be a huge economic boost. In fact, why stop there? Maybe the new party line will be that this is even better than a permanent cut.¹

    Alternatively, maybe Donald Trump will promise to veto anything temporary and send Republicans into total chaos. These days, who knows?

    On the bright side for the super rich, I assume that repeal of the estate tax will continue to be permanent. There are limits, after all.

    ¹For reasons to be invented later and then hastily confirmed by Greg Mankiw and John Taylor.